In particular, he takes aim at decisions by EU leaders to
establish deeper banking union by using centralized European
funds to directly recapitalize banks and creating a new European
banking regulator.

While other analysts have lauded this announcement as a step in
the right direction, Buiter is critical, arguing that the lack of
accountability in the European Central Bank will render any
European banking authority unreliable.

"As regards formal accountability, the ECB as interest
rate setter, liquidity and credit manager, lender of last resort
and market maker of last resort, displays less formal
accountability than any other leading central bank," Buiter
writes.

Or in other words, the ECB isn't a very good institution, in
large part because it's so opaque.

He explains:

Despite the Treaty containing elaborate voting procedures
for the Governing Council of the ECB, the ECB does not vote on
interest rates. If it votes on any other aspect of monetary,
liquidity or credit policy, it does not publish the voting
records of the individual members of the Governing Council,
thus hampering accountability. The ECB, which has increased the
size of its balance sheet from €1.2 trillion in June 2007 to
well over €3 trillion today, continues to refuse to provide the
European Parliament or the public at large with information on
the financial instruments it has bought outright (say through
the SMP), the prices and other terms and conditions of these
purchases or the identities of the counterparties. Likewise it
refuses to provide sufficient information on its collateralised
lending to determine the magnitude of any subsidy or tax
element that might be contained in the loan transaction. The
technical models used to price illiquid assets have not been
put in the public domain, nor have the actual valuations
produced by these private (to the ECB) models. We know the
haircuts, but not, for illiquid assets, the valuations to which
these haircuts are applied. It is clear that commercial
considerations and other legitimate grounds for confidentiality
may preclude the immediate release of certain types of
information. But given a time lag of, say, six months, we find
it hard to come up with convincing arguments for anything but
full and detailed disclosure...

Ultimately, Buiter concludes:

Past mutterings about the democratic deficit in the
European Union will be nothing compared to the angry roars we
can expect if bank supervision (and later deposit guarantees,
redenomination guarantees, the bank resolution regime and
bank resolution fund) are institutionalised without a
matching increase in democratic control over these agencies,
functions and competencies.

The best technocratic solution can come to nought
if it cannot be made acceptable to a sufficient plurality of
the people in the EA.

Buiters criticisms correspond with those we've heard from our
own sources, who have argued that
recent plans to expand the role of the ECB might be
counter-productive, in that they exacerbate the Bank's
ability to coerce European banks to fund troubled sovereigns.
In comparison to the Fed, they argue, the ECB remains opaque
in its attempts to distort markets.